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Haverford Trust CIO Hank Smith and Alan Lancz & Associates President Alan Lancz on the factors impacting investors’ strategies in the short-term...
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The book of October 2012 the solidly in the books and solidly in the red for our markets let's get right to -- street fight for the polls we have Hank Smith have -- trustee I don't want for the bears.
Alan Lance alum Lance & Associates president all right Hank you get first crack at this.
October to look good now we've got the election what do you anticipate for November and stocks.
Well well.
I anticipate some choppy trading in until the time the lame duck congress.
Kicks the can down the road extends all the tax cuts suspends -- sequestration.
To a new congress and White House in 2013.
I think at that point the -- about the market will happen.
A surge at the end of the year in celebration that we're not gonna hit the fiscal -- But -- that might not happen I mean if President Obama is reelected he has said he will not sign a tax -- doesn't include a tax increase.
And of course Republicans say they won't sign on to something like that so we may not reach a resolution on this.
-- -- yes they -- that I mean no matter who's the president.
-- no matter who's the president is the situation where there's a lot of uncertainty and it's not just the fiscal cliff I mean.
Europe is still not resolved.
Mideast tensions continue to grow and you have a situation where the emerging markets are slowing so I think you have a surge in valuations.
-- now late September 1 week of October because of the euphoria.
With QE3.
And we recommended taking some money off the table and raising some cash.
And into the weakness now we would be selectively buying so word we're not -- we just.
Prudently took profits.
Last month and and we would selectively buy -- prices go down.
All right so bearish but but you did that you took profits off by selling Google and apple which have been two relatively.
Bright stars over the past.
Say a year and a half so what is it about those two names would you ever bring those back into your portfolio again.
-- I mean they're great companies list so I mean apple only sold a little over 700 Google over 760.
And it's a situation where you know they go down I mean we've bought Google several times.
-- over the past forty years so so again we would be buyers into weakness father great companies we just thought they got ahead of themselves.
All earnings you just mentioned 42%.
72% -- volatile earnings but really low 40s%.
-- on revenues and that's where the problem is we're not getting that top line growth and that's where valuations were ahead of themselves.
Now Hank I know you'll like these dividend stocks like J&J.
But apple and under 600 box set must look at attempting know.
Oh if it doesn't we were -- fortunate enough to pick up apple up after initiated this dividend almost 600 dollars add to it again below 600.
So we do like apple here and expect us some very big dividend increases over the next several years.
Hank you know looking at at what we expect this ticket beyond let's say march of next year.
When you look at the returns of the stock market since what 19291930.
The returns have been around nine to 11% depending on.
You know what numbers you really look at do you still very much believe that equities -- sort of the main portion of people's portfolios a lot of the retailer at a retail investors and got very frightened -- have stayed away and have -- a really good rally.
Absolutely in fact we think that the march 09 lows were a generational low.
And we do not think we're gonna have two decades of lost returns also unfortunately it's going to take higher stock prices more to bring back.
The typical individual investor.
And when you hear repeatedly advertisements that buy and hold investing is through and done.
You know it's exactly the time to be buying and holding particularly good companies that have demonstrated earnings growth.
And do not have all high valuations and and -- plenty.
Throughout all us and.
Hank Smith thank you so much thank good to -- an -- Lance thank you as well appreciate -- guys shares of grew --
